With inflation still stressing out absolutely everyone and family budgets remaining tight, we're kind of all looking for something to give. For people who drive a lot, a huge budget item is gasoline, and the dramatic rise in the cost at the pump over the last few years has definitely gotten the attention of nearly everyone.
But when will gas prices go down? Or will they? That's the big question.
Gas prices and the presidential election
Since it's an election year, the expectation is that gas prices will drop as the election approaches, but this isn't exactly the revelation that people think it will be. Although gas prices have fallen between June and November for five of the last six presidential elections, it's been by incredibly small amounts -- except in 2008, when the economy almost entirely collapsed.
So, technically speaking, yes, prices are likely to drop by November, but probably not enough to even overcome inflation.
| Election Year | Gas Price in June | Gas Price in November | % Change in Price |
|---|---|---|---|
| 2024 | $3.601 | N/A | N/A |
| 2020 | $2.076 | $2.090 | 0.67% |
| 2016 | $2.225 | $2.187 | (1.71%) |
| 2012 | $3.552 | $3.488 | (1.80%) |
| 2008 | $4.065 | $2.151 | (47.10%) |
| 2004 | $2.041 | $2.010 | (1.52%) |
| 2000 | $1.617 | $1.555 | (3.83%) |
Data source: Federal Reserve Bank of St. Louis. Chart by author.
The EIA and gasoline predictions
The U.S. Energy Information Administration (EIA) has also taken a stab at predicting where gas prices may go, election superstitions totally aside. Back in January, it released its detailed Short-Term Energy Outlook (STEO), which by many standards might look kind of long term. Back then, the EIA predicted a leveling-off of prices, with gasoline averaging $3.36 per gallon for 2024 and $3.24 per gallon for 2025.
More recent forecasting, as of July 9, 2024, shows that gasoline prices are expected to remain a bit higher, at $3.40 for 2024 and $3.50 for 2025. So, we may be in for a slight decline in the next 18 months, but the powers that be do not see much of a change when it comes to the price of gasoline.
Crude oil futures contracts are also not giving a lot of indication that anything exciting is afoot, since they've remained more or less level for the last year. On July 24, 2023, contracts were at $78.74 per barrel; today they're at $77.26, which is just a 1.88% decrease year over year. Since crude oil makes up 55% of gasoline prices at the pump, essentially no change in futures means no likely change in gasoline prices in the near future, either.
Preparing for heavy long haul fuel prices
It looks like we're going to be in this gas price cycle for some time, so this may be time to make a significant switch in how you drive or what you drive. For example, commuters may want to consider trading their vehicles in for smaller, more fuel-efficient cars, or choosing a hybrid or electric vehicle if that's in the budget.
Others may want to look into ways to save more on the gasoline they do buy, like using an app that gives them the best gas prices in their area. Costco is another option for drivers who are located near a Costco gas station, where a gallon of gas is often $0.10 or more below the competition.
You'd want to make sure that you'll use at least 600 gallons of gas in the next year to justify the $60 membership fee (if you'll only be using it for the benefit of cheaper gas). But if your car gets 25 miles per gallon, and your daily commute is the average 42 miles total, with you and a spouse commuting separately, you only need about six months to burn that much fuel on commutes alone (that doesn't count weekend soccer games or dance recitals, if they apply).
Gasoline prices are holding steady
Unfortunately, gas prices are looking like they will hold steady for the next year or so, according to experts, as well as supporting data related to the cost of gasoline production. It's not the news you probably wanted to see, but at least it's not a prediction that gas prices are about to get worse, so there's that.
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